OPINION
OPINION
www.americanhardwood.org Article By: American Hardwood Export Council Title: The EU’s Illegal Timber Law: What It Really Means Author: Rupert Oliver, Environmental Consultant
processed wood products. Operators will shoulder by far the largest burden of responsibility under the ITL. Innocent Until Proven Guilty Only the operators will be liable for prosecution under the “prohibition” articles of the law. These articles make it a criminal offence to place timber illegally harvested under the laws of any country onto the internal EU market. The prohibition does not reverse the “burden of proof” - operators are innocent unless proven guilty. The onus is entirely on European authorities to prove that a particular timber product is derived from an illegal source to prosecute under this article of the law. Therefore the “prohibition” articles of the law do not place any obligations on operators to positively demonstrate legality before selling timber into the EU.
The EU’s new “Illegal Timber Law” (ITL) is likely to bring about a fundamental change in the way European wood traders do business. However there is still little understanding of what it will really mean in practice. Seeking greater clarity, Rupert Oliver recently met with the law’s architects at the EC’s Directorate General of Environment in Brussels. The ITL was published in the Official Journal of the European Union on 12 November and is due to be fully implemented by March 2013. So far media reporting on the law has been vague, at best, and in some cases downright misleading. Even the official website of the European Union misrepresents the law. On 3 December 2010, europa.eu published a press release claiming that when the ITL is introduced “EU operators selling timber and timber products for the first time on the EU market – whether they come from the EU or are imported – will need to know where their timber is from.” Hardly surprising then that subsequent press reports have claimed, incorrectly, that the ITL requires full traceability of all wood to forest of origin to verify legality. However my recent discussions with EC officials in Brussels suggest that the reality is rather more subtle and complex than this. In fact, the idea of riskassessment lies at the heart of the ITL. European importers will only need to identify the source as far as is necessary to make a credible assessment of the risk of illegal logging. If the wood comes from a defined region where there is clear, objective and up-to-date evidence to demonstrate a negligible risk of illegal logging, then it should only be necessary to track wood back to that region. In some cases, regions of negligible risk might encompass whole countries. But to fully understand the law, it is necessary to go back a few steps. It is, for example, important to emphasise that the law doesn’t impose any new documentation requirements for timber at point of entry into the EU. European customs authorities will not be demanding any new certificates or legality licenses. Instead, the ITL imposes new obligations on timber trading entities within the EU. The law divides these entities into two distinct categories known as “operators” and “traders”, each with a different set of obligations. “Operators” are those people or organisations that “first place” timber on the internal EU market. They include forest managers that first sell timber harvested in the EU, together with importers of timber and 074
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The “prohibition” articles will, however, provide a very strong incentive for operators to effectively implement another set of articles relating to the “due diligence system”. This is a bit like an ISO9001 or ISO14001 system with a single objective: to ensure there is a negligible risk of any wood being derived from an illegal source. At minimum, all wood purchases must be covered by documentation identifying the country of harvest, species, quantity and “where appropriate”, the region of origin and/or “concession of harvest”. The system must also ensure access to “documents or other information indicating [legal] compliance”. There must be procedures that draw on this information to enable the operator to evaluate the risk of illegally harvested timber being placed on the market. And there must be procedures to effectively mitigate any risks not assessed to be “negligible”. Independent Legality Verification In High Risk Regions What this means in practice is that EU importers are likely to demand thirdparty verified certificates that wood is from a specific legally harvested forest with all shipments of wood from, say, Indonesia or the Brazilian Amazon where independent studies suggest at least a third of wood supplied might derive from illegal sources. On the other hand, EU importers may need only a reliable assurance of region of origin if it can be shown that there is a negligible risk of any illegal logging within that region. This would be the case, for example, with U.S. hardwood products. In 2008, the American Hardwood Export Council commissioned the “Seneca Creek Study”, which is probably the most comprehensive illegal logging risk assessment undertaken anywhere in the world to date. This study provides objective, independent and peer-reviewed evidence that there is a less than 1% risk of any hardwood sourced from the United States being derived from an illegal source. So for American hardwoods, the combination of the Seneca Creek study and existing shipping documents - such as exporters’ invoices, phytosanitary certificates, and U.S. Shipper Export Declaration forms which accurately identify species, product type, quantity and that the product is of U.S.
origin - should be sufficient to demonstrate negligible risk and meet the ITL documentation requirements. The ITL also specifies that timber supplied under the CITES legislation or with a so–called “VPA License” – verifying that wood comes from a country that has signed a Voluntary Partnership Agreement with the EU to prevent illegal wood entering supply chains – may be treated as “negligible risk” and subject to no further mitigating actions by the operators. The law also acknowledges that existing systems of certification like FSC or PEFC should be “taken into account” during risk assessment procedures. Another feature of the ITL is that it recognises that many smaller operators may not have the capacity to develop their own due diligence procedures and would prefer to work within a group system. Trade associations or ENGOs imposing Codes of Conduct and Responsible Procurement Policies on member companies may apply to the European Commission for recognition as a “Monitoring Organisation”. The trade association or ENGO would then be responsible for verifying their members’ conformance to the due diligence system.
Traceability Obligation On Downstream “Traders” In The EU By comparison with “operators”, the responsibilities imposed by the ITL on “traders” are much less onerous. “Traders” are people or organisations downstream of the “operators” in the wood trading chain. They include internal EU merchants, manufacturers and retailers that do not harvest or import wood directly into the EU. Traders are subject neither to the “prohibition” or the “due diligence system” articles of the law. They are subject only to a “traceability obligation” requiring that each is able to identify their immediate suppliers and immediate buyers. This obligation may be fulfilled using existing financial documentation such as purchase and sales invoices. The aim is simply to help identify the EU operator that first placed timber on the EU market in the event of a challenge to its legal origin.
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